The African Development Bank (AfDB) has announced its commitment to provide $45 million (about K7.5 billion) to Malawi in budget financing to help the new Joyce Banda administration revive the countryâ€™s struggling economy.
AfDB president Donald Kaberuka made the announcement on Sunday after holding meetings with the International Monetary Fund (IMF) and the World Bank in Washington DC, according to Reuters News Agency.
Kaberuka told Reuters in an interview that he also had discussions with Minister of Finance and Development Planning Dr Ken Lipenga on the sidelines of the Washington meetings.
â€œI am confident Malawians are doing the right thing and we want to support them… This will be $45 million in two tranches. I am considering front loading this first tranche to support the currency realignment and to make the next tranche a floating one,â€ he said.
Kaberuka said he was determined to support Malawi as it tries to resume economic reforms.
He said the AfDB would begin discussions on the budget support, which were put on hold last year.
â€œNow that they [Malawi] are having very constructive discussions with the IMF, I am prepared absolutely to support Malawi as they resume the reforms, which were doing so well some time ago,â€ said Kaberuka.
The IMF started discussions with Malawi last week on a new economic programme that would be supported by an IMF loan.
The fund suspended its $79 million (about K13.2 billion) Extended Credit Facility programme with Malawi last year over former president the late Bingu wa Mutharikaâ€™s handling of the economy.
The IMF decision was followed by several of the countryâ€™s traditional donors suspending their budgetary aid a situation that worsened the countryâ€™s economic problems, including acute shortage of foreign currency to enable government import essential commodities such as fuel and drugs.
Kaberuka in the interview said he was confident that Malawi would now be able to repair its relationship with its donors.
One of the thorny issues with the IMF was the devaluation of the kwacha with the Mutharika administration arguing that devaluating the local currency would hurt the poor.